Creditors of Yellow's owner to vote on winding up company

Creditors of Yellow's owner to vote June 15 on winding up company, putting assets in new vehicle

By Jonathan Underhill

June 9 (BusinessDesk) - Creditors of NZ Directories Holdings, the owner of the Yellow directories service, will vote next week on a plan to wind up the company, putting the assets into a new vehicle which would issue them with securities in return for relinquishing claims to $385 million of debt.

Auckland-based NZ Directories has gross assets of $182.5 million and there is "no realistic prospect that the company can refinance the existing debt facilities with a third-party financier" when they come due on Aug. 31, the company said in a notice of meeting. "The only financiers in a position to provide finance to the company on expiry of the existing debt facilities are the restructure creditors, who are the existing financiers to, and ultimate owners of, the company."

The creditors would be issued shares and notes in the new vehicle, Yellow Holdings, which was incorporated on April 21. Brett Chenoweth, the chairman of NZ Directories, is the sole shareholder of Yellow Holdings.

The board is of the view that failure to approve the plan to restructure the financing arrangements would force the company to cease trading and result in receivership or liquidation, it said.

The June 15 vote requires support from 75 percent of the creditors by value. The notice of meeting says creditors York Global Finance, which would hold about 25 percent of the shares and debt of the Yellow Holdings, Varde Investment Partners, Morgan Stanley, Bennett Restructuring Fund, Bennett Offshore Restructuring Fund, Silver Point Luxembourg Platform, Macquarie Bank, SC Lowy Primary Investments, Merrill Lynch Capital Services, Staple Street Global Opportunities (Master) LP and Deutsche Bank "have agreed in principle to vote in favour of the restructure compromise."

The restructuring would effectively be the second time in four years that creditors have seized control of the directories business. Bankers to the company formerly known as Yellow Pages Group wrote off $1.05 billion of debt when they took control of the business in 2011. They were issued 250 million shares held via Yellow Pages Equity Trust and $500 million of senior notes, wiping out the equity of the original owners, Hong Kong-based Unitas Capital and Canada's Ontario Teachers' Pension Plan, who bought Yellow Pages from Telecom for $2.24 billion in 2007 in a leveraged buy-out.

More than 2 million New Zealanders use one of Yellow's products each week, according to its website. The company produces 18 regional and 22 local directories and distributes 2.7 million of them across the country each year, it says.

(BusinessDesk)

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